Santander Bank has been cleared of responsibility in a lawsuit filed by a Massachusetts customer who lost $751,000 in a cryptocurrency scam.
A state appellate court ruled that the bank was not legally required to block or investigate transactions authorized by the customer, even if they were linked to fraudulent activity.
Court rules Santander not obligated to prevent fraudulent transfers
Between December 2021 and January 2022, customer Lourenco Garcia completed two debit card payments and seven wire transfers from his Santander accounts to Metropolitan Commercial Bank in New York. These funds were used to buy cryptocurrency through Crypto.com and a fraudulent platform known as CoinEgg. After discovering that CoinEgg was a scam, Garcia attempted to hold Santander accountable, claiming breach of contract and consumer protection violations.
Garcia argued that the bank should have identified the unusual transaction pattern and taken action to prevent the loss. However, the appeals court rejected his claims, referencing Santander’s customer agreement. The court found that while the bank may act on suspected fraud, it has no legal obligation to do so. Additionally, Massachusetts law does not require banks to monitor or halt customer-authorized payments, regardless of potential fraud.
Marketing language does not create legal duty
Garcia also pointed to statements on Santander’s website, which mentioned that the bank would reach out to customers about questionable account activity. The court ruled that such language does not impose a binding obligation on the bank. It emphasized that Garcia personally authorized all of the disputed transactions and failed to report any concerns until after the money was lost.
The case, which began with a lawsuit in October 2022, ended with rulings from both the Superior Court and the appellate panel in Santander’s favor. While the decision does not set broad legal precedent, it reinforces a key principle that banks are not responsible for protecting customers from self-authorized crypto-related losses.
Crypto scam losses surge amid rising regulatory focus
At present, crypto fraud is growing rapidly in the market. Web3 sector rug pulls generated almost $6 billion in losses in the first quarter of 2025. DappRadar reports show that crypto fraud experienced an extraordinary 6,499% growth when comparing the first quarter of 2025 to last year’s figures, which amounted to $90 million. The Mantra incident serves as the primary source of damage that experts label as one of the largest scams in recent times.